Unions seek to halt Axia Energia's BRL 2.3B payout

On 18 September, 34 electric sector labor unions filed a petition with the 80th Labor Court of Rio de Janeiro seeking to suspend a payment of approximately BRL 2.3 billion that Axia Energia plans to make to shareholders on Tuesday, 22 September. Axia stated that it would not comment on the matter.

The urgent motion is part of an ongoing lawsuit seeking profit-sharing differences, known as PLR, covering the years 2016 through 2024. The unions argue that profits retained in reserves and subsequently distributed to shareholders should have been included in the calculation base for employee profit sharing.

In December of last year, Axia capitalized about BRL 30 billion in profit reserves and issued 606.8 million class C preferred shares, known as PNCs, to shareholders, which the company has been redeeming in cash. In the transaction scheduled for 22 September, 41.6 million PNCs are set to be redeemed and canceled for an estimated BRL 2.3 billion. The company is expected to keep BRL 3.9 billion available for future similar operations.

The unions said that part of the proceeds would be transferred to Citibank and foreign investors, making funds difficult to recover if the court later rules in favor of the workers. In January of this year, Judge Maria Candida Rosmaninho of the 7th Labor Court of Nova Iguacu ordered Axia to provision BRL 750 million as collateral. The 80th Labor Court of Rio de Janeiro subsequently overturned that preliminary ruling in full after an appeal by the company, citing the absence of imminent harm and the solid financial standing of Axia.